Licensing’s Contribution to Inequality

Occupational licensing takes rungs off the mobility ladder for those who most need them, suggests Jared Meyer, writing in the Washington Examiner:

According to estimates by the Archbridge report’s authors, the growth of licensing corresponded with up to a 6.7 percent decline in absolute mobility, depending on the state. In other words, because of occupational licensing, children who grow up in low-income families are less likely to achieve the American Dream when they are adults. …

Researchers are still discovering just how much occupational licensing harms economic mobility, but there is no question that these barriers disproportionately harm low-income individuals. The Archbridge Institute’s new report, along with a continued focus on the problem by state and federal policymakers, offers hope that more positive policy changes are coming.

According to the report, the reduction in upward mobility for Rhode Island due to its licensing regime is 3.7%, and the increase in the Gini Coefficient (a measure of income inequality) is 8.6%. That is, occupational licensing helps those who’ve already made it keep it and serves to block those who haven’t from doing so.

Added to tax burdens and every other drag that Rhode Island puts on economic activity, licensing is one reason the “productive class.” We don’t need more programs, government handouts, and central control. We need more freedom and opportunity.